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BANGALORE / NEW DELHI: Audit firm Lodha & Co has emerged as a surprise contender to partner specialty retail giant Marks & Spencer (M&S) in India. Sources said the UK based M&S has shortlisted at least three potential suitors to be its minority partner, with Lodhas being one among them.

The $16-billion M&S has been holding talks with players like Tatas-led Trent Ltd and Mahindras amongst others. M&S, working on a new India business strategy, wants to enter India directly through an equity joint venture in which it holds the maximum permissible 51% stake. UK’s iconic retailer could unveil a decision on its India partner within a month, sources added.

M&S is, currently, present in the country through a franchisee arrangement with Planet Retail but is looking at accelerating growth in emerging markets like India and China. Planet Retail operates 20 M&S stores in India currently. India allows 51% FDI in single-brand retailing while foreign retailer selling general merchandise under multiple brands are banned to make direct investments.

Sources said M&S could rope in a financial investor who would keep 49% stake and also be a passive partner in the joint venture. Besides, some of the domestic retailers may not be comfortable with a minority position. It is believed that AV Birla Group declined an offer to be a minority partner after M&S initiated tentative talks regarding a possible alliance.

Marks & Spencer declined to comment on queries posed by ET, including a specific query on its talks with suitors like Lodha & Co. “I am afraid we have no comment to make on either how or with whom we will accelerate the pace of our growth in India. We will keep you posted on future developments,” Clair Foster, a M&S spokesperson, said from London. The global retailer has set up a business development team in Bangalore headed by Spencer Sheen.

While Lodhas are a surprise name in the fray, it may be mentioned that the Kolkata-based audit group is already a 49% investor in a JV with Italian luxury fashion brand Ermenegildo Zegna. The Italian house, which entered India tapping the 51% single-brand retailing route, preferred a silent financial partner who are merely investors.

Meanwhile, it is unclear whether Marks & Spencer was keen on 51% stake, which is permissible under Indian laws, or whether it would settle for an equal JV with an Indian retailing group. Sources said suitors like Trent are likely to push for a 50:50 joint venture for preparing ground for the UK retailer’s future expansion plans.

Marks & Spencer operates around 520 stores in UK and 240 stores in 35 countries globally. It is UK’s largest clothing retailer and a multi-billion pound food retailer as well. Last month, Marks & Spencer chief executive Stuart Rose said he hoped to accelerate the company’s expansion plans in India, where it is present since December 2001.

Modest growth on home turf has prompted Marks & Spencer to chart a more aggressive international growth strategy with India and China as the big bets.